The US suspends Mastercard and Visa in Russia, what does it mean? | VARINDIA News Hour

#Visa and #Mastercard are suspending their Russian operations, as per a statement and they would no longer handle card operations pertaining to sanctioned Russian banks. They are now extending that to all card issuers and merchant processors in Russia. With this there will be a big impact on foreigners who won’t be able to use their Visa or Mastercard cards for purchases in the country, whether online or in person. Russian cardholders are still able to use these cards for purchases in Russia, but their transactions will travel over other networks, mainly Russia's homegrown payments system, Mir. Mir is a Russian payment system for electronic fund transfers established by the Central Bank of Russia under a law adopted on 1 May 2017. The system is operated by the Russian National Card Payment System [ru], a wholly owned subsidiary of the Central Bank of Russia. Russian cardholders won’t likely be able to use their Visa- or Mastercard-branded cards outside the country. “All transactions initiated with Visa cards issued in Russia will no longer work outside the country,” Visa said in a statement.

Western financial institutions have moved rapidly to sever ties with Russia, in some cases going well beyond sanctions on the country’s biggest banks. Their moves have hobbled the country’s economy and cut off Russian citizens and companies from the global financial system. On the surface it looks like a brilliant move to cripple financial transactions of Russia. But scratch the surface and it will actually mean that the US will weaponize its corporations on countries not on the same page with them. But the question is will it impact Russia? Yes, to some extent.

What effect will it have? It will simply cripple Mastercard and Visa growth in future as many nations wouldn’t want to be hostage of the US financial or corporate system. China has Union Pay, Japan has.